Thursday saw a revival of one of the London market’s more radical merger ideas with veteran analyst Tony Shiret revisiting his proposal that Marks and Spencer and Next should get together.
Mr Shiret — who joined Whitman Howard in the summer, having been a star name in nearly two decades at Credit Suisse — argued that, while an M&S-Next merger remains unlikely, it continues to make a lot of sense.
Both companies need “big picture thinking” to address their excess capacity and manage the decline of the traditional distribution channels, he said.
Combining M&S and Next “would be seen as a more defensive merger” and “a joining of equals” than when the idea was first pitched nine years ago, Mr Shiret said. He also argued that the repair of the M&S pension fund has removed another obstacle to the union.
But with radical solutions unlikely, Next (up 0.6 per cent at £45) is a “sell” due to the deterioration of its Directories business, the Whitman Howard analyst said.
M&S (up 0.2 per cent to 329.3p) is worth buying, he said, for a short-term recovery in non-food profitability.